State – Page 9 – Hank Kalet

Nothing surprising about these responses to Corzine budget address

The responses to the governor’s budget address fell within the range of accepted opinion, with Democrats praising Jon Corzine for making tough decisions and Republicans calling him out for increasing taxes.

Here is what the GOP had to say on its site:

Jon Corzine introduced his budget proposal for the coming year and…Surprise…he wants to raise your taxes again! Our Republican legislators have drawn a line in the sand. They sent a clear message today: “We’re with the taxpayers. We’re not supporting any budget that raises any taxes on anyone. Period.”

The Corzine $1.5 billion tax hike plan:

Raise property taxes $500 million by eliminating rebates for anyone who earns over $75,000 a year.

Raise property taxes ANOTHER $400 million by eliminating the property tax deduction from NJ Income Taxes (by the way, Obama wants to eliminate the deduction from your federal tax too!)

Raise income taxes $380 million

$400 million tax hike by eliminating the property tax deduction

$80 million in increased business taxes

$48 million tax hike on cigarettes, alcohol and wine

$30 million in increased motor vehicle fees

We’re in the midst of the worst recession since World War II. Economics 101: You don’t raise taxes in a recession!

Republicans understand this and are standing strong and firm. After 7 years of tax increases (more than 100), a 50% increase in state spending, and a TRIPLING of state debt, it’s time for all of us to draw a line in the sand and say “Enough!”

Interesting take. But I have a question: Given the constitutional requirement to balance the state budget and the massive deficit created by governors of both parties — $7 billion, according to Corzine — what would the Republicans do differently? They have a list of cuts — most of which are unrealistic, or directly target New Jersey’s poorest (in the urban areas).

Former Gov. Christie Whitman made it clear that budgets are policy documents, the places where elected officials walk the walk. In this case, the GOP reform plan would cut money targeted toward municipal consolidation, urban schools, the City of Trenton (which gets money because of the revenue it loses to state buildings) and urban aid. There are positive elements in the plan — some of the process reforms make sense, though the two-thirds rule on tax increases would dangerously tie the state’s hands (states that have enacted this rule have run into massive budget problems with some overturning the rule by public referendum).

I give the state GOP credit, though. The national party has offered nothing.

As for the Democrats — they are saying what one might expect them to say, given that most of them helped created this mess in the first place. Yes, tough decisions have to be made. But is anyone prepared to make them?

All this talk is nothing more than talk. We have three and a half months to pass a budget. Does anyone really believe it will look like the one Jon Corzine unveiled today?

A taxing state budget

As a property tax payer, I can’t say I am happy about this development — though, I can’t say I’m surprised.

Gov. Jon Corzine yesterday confirmed New Jersey’s popular property tax rebate program is among the items that may be cut or curtailed as he tries to balance the upcoming budget.

“Everything is on the table, and that’s where it will stay” until the budget address March 10, Corzine said.

Corzine said a “suspension of the property tax rebates would be a better way to talk about it,” but quickly added, “there’s a purpose to providing property tax rebates.

“Property taxes are a heavy burden. It’s not a gimmick program. It’s meaningful. We’re not anxious about making these decisions,” Corzine said, speaking to reporters at Kean University in Union Township, where he addressed high school students attending a leadership conference.

With diminishing options for cutting the budget, Corzine is preparing plans to severely curtail or eliminate the rebates for the coming year, The Star-Ledger reported yesterday.

The rebate checks to homeowners and tenants, which cost the state about $1.7 billion last year, represent one of the largest remaining nonessential spending items in the budget Corzine will present to the Legislature next month. He has estimated the spending plan at $29 billion, down from the $32.9 billion budget originally passed this year.

“We have to make tough decisions. The people expect us to be prepared to make the tough decisions,” he said.

The property tax rebate program has always existed on somewhat shaky ground, the product of a political compromise that was unsustainable as the state’s budget difficulties ran headlong into the national recession.

The program’s likely dissolution, hopefully, will be an impetus toward real reform, which the rebates never were. The only way to address property taxes, while dealing the state’s budget problems is to change the way we collect and spend money. That means moving toward a broader income tax that covers more services, municipal and school-district consolidation and a complete review of the kind of programs the state and local governments offer. (I’d also consider gutting county government, which is little more than a mechanism to collect massive amounts of campaign contributions and reward contributors with contracts.)

The hole gets bigger in the budget

New Jersey is facing a $3.5 billion deficit. That’s in the current fiscal year’s budget.

The recession, combined with years of questionable budgetary practices, has left the state with empty coffers and questions about how to continue providing services now and into the future.

To put the number into perspective, $3.5 billion represents about 12 percent of the current year budget — or one out of every eight dollars anticipated before the year began.

In response, state officials are planning two unpaid furlough days for state employees, one each in May and June, saving $35 million. State Treasurer David Rousseau said the furloughs can be done without the consent of public worker unions, which have already objected to a proposed salary freeze.

In all, Corzine announced there will be an additional $472 million in budget cuts, $550 million in additional funds from the federal stimulus bill and $335 million in extra funds from state surpluses and trust funds.

The state also plans a tax amnesty program, which will need legislative approval, that would bring the state an additional $100 million.

This year’s deficit now exceeds 10 percent of the original budget adopted last summer. It includes a $2.8 billion shortfall in revenue, a $600 million increase in spending — including a $270 million deposit into the depleted unemployment fund, to avoid an automatic tax hike on businesses — and $135 million extra to repay debt.

“That comes with difficult choices and real pain in a lot of places,” Corzine said.

And things are not likely to get better by the time the governor unveils his fiscal year 2010 budget,

Revenue in the current budget is forecast at $29.5 billion. Collections for the upcoming fiscal year, beginning in July, are now $28.5 billion, meaning another group of budget cuts can be expected in Corzine’s March 10 budget speech.

This is why, when revenue is pouring in during good times, you have to sock some away. To do what the state has done — under administrations of both political parties — is to court disaster when things turn bad.

Library money a hot potato

The odd manner in which New Jersey funds its libraries has some communities up in arms. But the fixes on the table all seem to fall short of what needs to be done to protect public libraries while addressing the concerns of smaller towns like Jamesburg.

Current state law is tied to property value. Municipal libraries — those created by referendum and funded through local property taxes — get a minimum of one-third of a mill, or about 33 cents on every thousand dollars of equalized assessed property value in a municipality. Few had been concerned with the formula until the last decade, when property values across the state skyrocketed, driving up library funding at a time when the public has hit the wall on property tax hikes.

A tax levy cap imposed a few years ago exacerbated this conflict — towns saw their taxable value grow due without their real tax base increasing, which forced them to increase library spending; however, they were limited in how much they could increase their tax levy, meaning that library spending was eating into other programs.

Keep in mind, however, that the same towns spent much of the ’90s with stagnant tax bases. They took advantage of the lack of growth by keeping library spending static (or making cuts) and boosting spending in other areas, such as on police.

Obviously, towns like Jamesburg face difficult questions and it does seem that changes need to be made in how libraries get their money. But cutting the minimum in half, as the League of Municipalities is proposing, is foolish, especially with property values declining in many areas of the state.

A better solution would be to tie funding to population and to encourage the creation of larger regional libraries, such as the Mercer and Somerset County systems, but leaving the decision on whether to regionalize in the hands of individual communities.

Another solution would be to remove library funding from the municipal budget altogether. Municipal governments not only have little discretion over how much is spent on the library, they have little input into personnel decisions and day-to-day operations, aside from making appointments to an independent board of trustees. Make the library a separate line item on the tax bill that is tied to a formula and allow the libraries to raise additional money — as many do now — through the creation of foundations and friends groups.

The difficulties faced by municipal governments are real. But so are the concerns raised by library officials. A more creative solution has to be put on the table.

The news is still bad

The governor, during his third state of the state address, continued what has been a long litany of dire pronouncements that in the end amount to nothing. Only this time, he attempted to borrow a page from President-elect Barack Obama and recast the bad news through a hopeful lens.

New Jerseyans’ “determination remains strong,” their “drive is undiminished” and “work ethic knows no bounds” — which will aid the state in digging itself out of its mess.

The problem is that New Jersey is not hurting because of the recession, though the national economy has not made matters any better.

The reality, as the governor has been saying since he first took office, is that the state has been making too many bad fiscal choices over the years, avoiding the difficult decisions and shifting money from one pocket to another and calling it income. That allowed it to avoid painful budgetary decisions — until the 2006 budget standoff led to a government shutdown. Since then, state government has been a bit more honest about what it faces, though it has remained unable to do what needs to be done to change the way we spend and raise money.

The national economy has made these problems worse, by eroding state revenues at a time when the state needs to spend added money on its social safety net and on infrastructure projects that would generate jobs. In the past, the state would borrow money to plug the gap, but the governor is proposing a belt-tightening that may address some of the long-term budget problems but lead to added pain now.

The governor admits this.

By the close of the calendar year, the deepening recession had required us to cut spending by another $800 million. That’s a total of $1.4 billion in cuts in this fiscal year alone.Let me repeat — $1.4 billion …… not in the rate of growth, but in absolute dollars.

It’s been painful, and we’ve had to make many ugly choices. But together with my partners in the Legislature, we are making the hard choices.

The question remains, however, whether they are making the right choices. The governor announced likely cuts in state aid to towns while making it clear that they will not be able to raise taxes to offset the cuts. That will just force the pain downward, making them slash their services.

In the end, Jon Shure, president of the liberal New Jersey Policy Perspective, hit it right in his comments to The New York Times, giving the speech “mixed marks” and saying “he would have liked to hear more concrete plans, rather than a campaign-style list of greatest hits.”

“The ratio between the accomplishments of the past and proposals for the future was far more in favor of the past, especially compared to his past speeches,” he said. “So it lacked a coherent vision of what we want the state to be.”